Petrobras Profits Surge On Asset Sales

Brazilian state oil company Petrobras posted its highest ever quarterly profit on August 2, on the back of asset sales that more than offset a slump in revenues.

Net profit totalled reais 18.9bn ($4.93bn) for the three months ending June 30, up from reais 10bn in the same last year and reais 4bn in this year’s first quarter. However, net income after exceptionals were less than half, at reais 5.16bn, versus reais 11bn the same time last year earlier.

Revenues totalled reais 72.6bn, down from reais 74.8bn in the second quarter of 2018. Adjusted Ebitda stayed firm, however, rising from reais 30.1bn a year ago to reais 32.7bn.

Petrobras CEO Roberto Castello Branco accepted that results had been buoyed by asset sales, as well as other external factors such as beneficial exchange rates. He also reaffirmed the company’s commitment to further divestments. Petrobras' core goal is to cut ties with gas transportation and distribution in order to focus more on the upstream.

“We need midstream asset services, but we don't need to own them,” he said in a statement. “The idea is to be an asset-light company in the midstream and a world class asset-heavy company in oil and gas exploration and production, maximising the return on every dollar invested. We are gradually managing to eliminate our participation in businesses that bled Petrobras’ cash for several years.”

Petrobras recently agreed with the Uruguayan government on the return of the Montevideo Gas and Conecta concessions, which Castello Branco said had cost the company $200mn in lost capital over 15 years. Other major recent divestments include the firm’s sale of the TAG gas pipeline system and petroleum product distributor BR Distribuidora. It has also dropped mature fields with low productivity and high extraction costs.

Moving forward, Petrobras is looking to halve its refining capacity through the sale of eight processing plants.